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Editorial - Running a nonprofit is hard, but givers don’t like to see fat executive salaries

Published: Monday, February 11, 2013 at 9:38 p.m.

Last Modified: Monday, February 11, 2013 at 9:38 p.m.

When people give to charitable organizations, they don’t expect the top administrators to siphon off a sizable portion of that to pay themselves. Hence the uproar over news that together, the married couple that run 36 Goodwill stores in North Carolina earned almost $800,000 in salaries and benefits in 2011.

Running a large nonprofit organization is not a task just anyone can do. Fair compensation should be expected for the type of expertise and time required. But Dennis and Linda McLain, chief executive and executive vice president, respectively, of Goodwill Industries of Eastern North Carolina, saw their compensation increase by almost 20 percent from 2008 to 2011 – the same period in which many North Carolina families saw incomes fall.

In setting their salaries, the board of directors compared not only other similar-size nonprofits but also for-profit corporations, which undoubtedly skewed the perception of what is “fair compensation.” Another troubling aspect is that the agency apparently had a cozy business arrangement with one of its board members who left in 2011. While he served on the board, his company was paid more than $300,000 in commission to broker land purchase deals.

By most accounts, the McLains have been responsible for the impressive growth of the Goodwill Community Foundation stores, and for changing the focus from simply working with the disabled to a broader mission. The Triangle-based organization brought in $32.6 million in donations of clothing, furniture, computer equipment and other items that are resold in its 36 stores. Their workers earn better-than-average wages. Goodwill Industries of Eastern North Carolina includes the Wilmington-area GCF stores.

But people who donate their clothing and shop in the GCF stores might not like the notion that the people who run the charity profit so generously from their donations. Again, it’s hard to run a successful nonprofit organization, to ensure accountability and compliance with all relevant laws and regulations. The job isn’t a minimum-wage endeavor, but neither should the gig be the equivalent of a walk on Wall Street.

It is not unusual for administrators of large nonprofits to earn six-figure salaries, but even by those standards the McLains’ compensation stands out.

While the Cape Fear Area United Way can’t compare in size or budget, the salary and other reportable compensation for agency President Chris Nelson totaled just over $90,000 in the most recent budget year.

It “irritates” him to read about nonprofits – he acknowledges that some other United Way organizations have fit this description – that pay extremely high salaries, because of the message it sends to the people who support these organizations. “It’s just wrong,” he said. It’s hard for the average person not to lump all nonprofits together, although most do not compensate their top executives so generously.

According to The News & Observer of Raleigh, the average pay for the head of a large nonprofit in the Triangle area is $82,800. But when you leave North Carolina, salaries climb. The average pay for a top nonprofit executive in the Southeastern United States is $251,900 and may reflect very large organizations. Where is the line?

That is difficult to pinpoint, but Americans already have plenty to be cynical about. Organizations whose mission is to help others should be particularly careful about the image they convey.

<p>When people give to charitable organizations, they don't expect the top administrators to siphon off a sizable portion of that to pay themselves. Hence the uproar over news that together, the married couple that run 36 <a href="http://www.starnewsonline.com/section/topic92"><b>Goodwill</b></a> stores in North Carolina earned almost $800,000 in salaries and benefits in 2011.</p><p>Running a large nonprofit organization is not a task just anyone can do. Fair compensation should be expected for the type of expertise and time required. But Dennis and Linda McLain, chief executive and executive vice president, respectively, of Goodwill Industries of Eastern North Carolina, saw their compensation increase by almost 20 percent from 2008 to 2011 – the same period in which many North Carolina families saw incomes fall.</p><p>In setting their salaries, the board of directors compared not only other similar-size nonprofits but also for-profit corporations, which undoubtedly skewed the perception of what is “fair compensation.” Another troubling aspect is that the agency apparently had a cozy business arrangement with one of its board members who left in 2011. While he served on the board, his company was paid more than $300,000 in commission to broker land purchase deals.</p><p>By most accounts, the McLains have been responsible for the impressive growth of the Goodwill Community Foundation stores, and for changing the focus from simply working with the disabled to a broader mission. The Triangle-based organization brought in $32.6 million in donations of clothing, furniture, computer equipment and other items that are resold in its 36 stores. Their workers earn better-than-average wages. Goodwill Industries of Eastern North Carolina includes the Wilmington-area GCF stores.</p><p>But people who donate their clothing and shop in the GCF stores might not like the notion that the people who run the charity profit so generously from their donations. Again, it's hard to run a successful nonprofit organization, to ensure accountability and compliance with all relevant laws and regulations. The job isn't a minimum-wage endeavor, but neither should the gig be the equivalent of a walk on Wall Street.</p><p>It is not unusual for administrators of large nonprofits to earn six-figure salaries, but even by those standards the McLains' compensation stands out. </p><p>While the Cape Fear Area United Way can't compare in size or budget, the salary and other reportable compensation for agency President Chris Nelson totaled just over $90,000 in the most recent budget year.</p><p>It “irritates” him to read about nonprofits – he acknowledges that some other United Way organizations have fit this description – that pay extremely high salaries, because of the message it sends to the people who support these organizations. “It's just wrong,” he said. It's hard for the average person not to lump all nonprofits together, although most do not compensate their top executives so generously.</p><p>According to The News & Observer of Raleigh, the average pay for the head of a large nonprofit in the Triangle area is $82,800. But when you leave North Carolina, salaries climb. The average pay for a top nonprofit executive in the Southeastern United States is $251,900 and may reflect very large organizations. Where is the line?</p><p>That is difficult to pinpoint, but Americans already have plenty to be cynical about. Organizations whose mission is to help others should be particularly careful about the image they convey.</p>